SOURCE: Allied Energy Group, Inc.

December 28, 2006 09:00 ET

Allied Energy Group, Inc. Begins Drilling Operations for the Holly Beth #1 in Schleicher County, Texas

BOWLING GREEN, KY -- (MARKET WIRE) -- December 28, 2006 -- Allied Energy Group, Inc. (PINKSHEETS: AGGI), participating with Halliburton Operating Company, announced today that the Company has commenced drilling operations for its 6,000' +/- vertical well (Holly Beth #1) to test the Strawn Limestone in Schleicher County, Texas.

"We have drilled the surface hole and are now running surface casing in the well-bore. We anticipate 7-10 more days of drill time to reach target depth," said Steve Stengell, Allied's Sr. Vice President of Operations.

The prospect is confirmed by excellent well control and positioned as a direct step-off to the Tucker-Milligan #1 completed for production in December 1965.

The Tucker-Milligan #1 originally tested at the reported rate of 6.2 million cubic feet of gas and 87.9 barrels of condensate per day. It was completed for production in the Strawn Limestone at approximately 5,800 feet in vertical depth.

In 1965 when the Tucker-Milligan #1 was completed, natural gas was valued at approximately eight cents ($.08) per 1,000 cubic feet (MCF). Also, when placed in production, the Tucker-Milligan #1 had too little of line pressure (to sell into the main high pressure line) necessitating a compressor station in order to produce at full capacity. This severely restricted the well's production. These factors led to the Tucker-Milligan #1 being abandoned after producing only 118.85 million cubic feet of natural gas.

A lot has changed in 40 years.

1.) An extensive gas line infrastructure (providing the appropriate line pressure) now exists alleviating the need for a compressor station. 2.) Natural gas prices today are nearly 100 times what they were in 1965.

About Allied Energy Group

Allied Energy Group, Inc. (PINKSHEETS: AGGI) is an independent energy development firm primarily engaged in the exploration, development, and production of oil and natural gas in the continental United States. The company relies upon its strategic industry partners, geologists, petroleum engineers, seismic specialists, and financial analysts whose combined industry experience is essential to the success of each project. Allied Energy Group's strategic focus is the development of oil and natural gas reserves. As the fuel of choice to meet the growing demand for a clean-burning domestically produced fuel, the company firmly believes its natural gas exploration strategy should provide substantial growth to the company for the years to come.

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Certain statements in this release and the attached corporate profile that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by the use of words such as "anticipate," "believe," "expect," "future," "may," "will," "would," "should," "plan," "projected," "intend," and similar expressions. Such forward-looking statements involve known and unknown risks inherent to the oil and gas industry, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements. The Company's future operating results are dependent upon many factors, including but not limited to the Company's ability to: (i) obtain sufficient capital or a strategic business arrangement to fund its expansion plans; (ii) build the management and human resources and infrastructure necessary to support the growth of its business; (iii) competitive factors and developments beyond the Company's control; and (iv) other risk factors.

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